New Zealand's tax authorization has issued new proposals on the Appurtenances and Services tax (GST)-related policy in regard to cryptocurrencies and is seeking public feedback on the issue.

On February. 24, New Zealand's Inland Revenue Department (IRD) released a paper, which includes proposals on the improvement and simplification of revenue enhancement invoice requirements and exclusion of cryptocurrencies from specific GST provisions.

To minimize a distortion in the crypto market

The document admits that New Zealand has a fast-growing crypto assets marketplace and expects that most stakeholders volition welcome the proposed regulations, or suggest wider revenue enhancement and regulatory reforms. The land'south revenue enhancement system ostensibly intends to ensure that the revenue enhancement rules do not create barriers for crypto-related developments. The paper reads:

"The definitions used for money or financial services as "exempt supplies" (pregnant they are non bailiwick to GST) did not contemplate crypto-assets, significant GST may be imposed on certain types of crypto-assets, but not others – depending on their particular purpose and design. This caitiff GST handling is unintentionally favouring certain types of crypto-assets over others and likely resulting in a distortion in the crypto-asset market."

What about income tax?

Specifically, the regulator proposes to exempt cryptocurrencies from both the GST rules and the financial arrangements rules, while crypto-related services — such equally exchange services and mining — will continue to be subject to the existing GST and income tax rules. At the same time, users of certain crypto assets will have to pay income taxation on unrealized gains and losses.

GST volition withal exist applied to supplies of goods and services purchased with cryptocurrencies, the paper states:

"The proposed GST changes would only utilize to supplies of crypto-avails. Other services related to crypto-assets, that are not in themselves supplies of crypto-avails such as mining, providing crypto-asset exchange services or providing communication, general business services or computer services volition continue to be subject to the existing GST rules."

The bureau suggests that unproblematic and clear tax rules will contribute to further the growth of the crypto sector in the land every bit they could ensure that crypto investors and businesses are non at a disadvantage due to dealing with such kinds of assets.

As such, the agency asks the public to provide feedback on the proposals set forth in the newspaper and annotate on the potential approaches to the treatment of cryptocurrency.

Government's concerns

While New Zealand is trying to establish itself every bit a crypto-friendly country, IRD Commissioner Naomi Ferguson has made information technology clear that the New Zealand government does not consider crypto to be a currency:

"In the Commissioner's view, crypto-assets are property. Crypto-assets are non 'money' as commonly understood (at to the lowest degree non at the present fourth dimension). In particular, because crypto-assets are non issued past any government, they are not legal tender anywhere."